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What do the Labour Codes Mean for the Indian Worker?
Pavan Korada
On Friday, November 21, 2025, the Union Ministry of Labour and Employment notified the rules for four Labour Codes. This overhaul absorbs and repeals 29 existing central labour laws.
These Codes – the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020 – represent the most significant restructuring of India’s labour jurisprudence since Independence.
While the government asserts these reforms will improve, not just the “ease” but also, the “speed of doing business” by simplifying compliance and universalising social security, trade unions and opposition parties have launched nationwide protests. They have called the move a unilateral imposition that dismantles the hard-won rights of the working class.
What is the context of this notification?
The Codes come into force nearly six years after their parliamentary passage, ending a prolonged administrative limbo. Their legislative history is rooted in political contention. The Code on Wages passed in 2019, while the remaining three – Industrial Relations, Social Security, and OSH – were passed in September 2020.
Notably, the parliament cleared the 2020 Codes in a truncated session while the opposition boycotted proceedings over the Farm Bills. This period also coincided with widespread civil unrest regarding the Citizenship Amendment Act (CAA) and the pressures of the COVID-19 pandemic.
Critics cite the lack of tripartite consultation as a primary flaw. The Indian Labour Conference (ILC) – the apex mechanism where government, employers and workers deliberated policy – has not convened since 2015. This omission has drawn criticism even from within the ruling establishment.
In March 2025, Basavaraj Bommai, senior Bharatiya Janata Party (BJP) leader and chairperson of the Parliamentary Standing Committee on Labour, publicly criticised the Union government for failing to hold the ILC, noting that such omissions undermine the democratic legitimacy of labour reforms.
Why ‘Codes’ and what are the implications for federalism?
Shifting from specific “Acts” to consolidated “Codes” is not just a tweak but a structural overhaul. By amalgamating 29 diverse laws, the parliament has effectively delegated substantial legislative powers to the Executive (both Union and state governments) through “Rules”.
Substantive details – such as the specific calculation of the floor wage, safety limits, or social security thresholds – previously embedded in the hard text of Acts now sit within “Rules” that the government can alter by notification without immediate parliamentary scrutiny.
Since ‘Labour’ is on the Concurrent List, both the Union government and states must frame rules for these Codes to function. While the Union government has notified the Codes, the legal landscape remains fragmented. “Business-friendly” states like Uttar Pradesh, Karnataka, Andhra Pradesh, and Gujarat have pre-drafted rules increasing daily working limits and introducing self-certification.
Conversely, states with strong union presence like Tamil Nadu and West Bengal have delayed finalising rules. This creates a “compliance asymmetry,” where labour standards could vary drastically across states. Analysts fear this may trigger a “race to the bottom,” where states compete to attract capital by framing the most “flexible” or deregulated rules, eroding uniform worker protection.
How has the State-Labour relationship evolved?
This notification marks the Indian state’s philosophical shift from “protectionism” to “facilitation”.
After 1947, labour jurisprudence – exemplified by the Industrial Disputes Act, 1947 and the Factories Act, 1948 – was built on the premise that the relationship between capital and labour is inherently unequal. The state intervened to ensure tenure security, regulate retrenchment and mandate welfare, serving as a check on capital’s arbitrary power.
However, post-1991 liberalisation saw a paradigm shift. International financial institutions like the IMF and World Bank argued that India’s “rigid” labour laws, particularly regarding retrenchment and closure, impeded investment. The Second National Commission on Labour (SNCL), appointed in 1999, formalised this view.
The SNCL recommended “rationalising” labour laws, a euphemism for easing hiring and firing restrictions, while proposing separate “umbrella legislation” for the unorganised sector. The current Codes realise the SNCL’s roadmap. They institutionalise the view that labour rights must be calibrated to market needs, fundamentally altering the social contract between the worker, the employer and the state.
What do the four Codes entail?
The Code on Wages, 2019
This Code absorbs four laws, including the Minimum Wages Act, 1948 and the Payment of Bonus Act, 1965. A central ambiguity lies in the “Floor Wage”. The Code mandates the Union government to fix a floor wage, below which no state can set its minimum wage. However, it does not statutorily bind the government to the nutritional and consumption standards laid down by the Supreme Court in the Raptakos Brett case (1992). Critics fear this discretion could institutionalise poverty wages rather than a living wage.
Structurally, Section 2(y) introduces a uniform definition of ‘wages’, mandating that allowances (like HRA or conveyance) cannot exceed 50% of the total remuneration. If they do, the excess is added to the basic wage for calculating PF and Gratuity. While this increases the social security kitty, it may reduce the monthly “take-home” pay for many employees.
Administratively, Section 51 replaces the traditional “Labour Inspector” with an “Inspector-cum-Facilitator”. This name change signals a functional shift from enforcement to advisory, prioritising “web-based” and “randomised” inspections over physical verification. Furthermore, the Code allows for the “compounding” of offences, where employers can pay a fee to avoid prosecution. Critics argue this monetises illegality, transforming wage theft from a crime into a manageable “cost of business”.
The Industrial Relations (IR) Code, 2020
Consolidating the Trade Unions Act, 1926 and the Industrial Disputes Act, 1947, this Code radically alters dispute resolution and tenure security. Most contentious is the expansion of ‘Hire and Fire’. Under the previous regime, establishments with 100 or more workers required government permission for retrenchment or closure. Chapter X raises this threshold to 300 workers. According to the Annual Survey of Industries, this exempts over 90% of India’s industrial units from scrutiny, effectively allowing employers to retrench workers at will.
To balance these easier norms, Section 83 establishes a “Reskilling Fund”, requiring employers to contribute 15 days of wages for every retrenched worker. Unions dismiss this as a meagre, one-time payment replacing long-term job security. Further diluting security, Section 2(o) gives statutory recognition to “Fixed Term Employment”, allowing employers to hire workers for specific durations for any work, including core perennial tasks. This allows management to renew contracts repeatedly without committing to permanent tenure.
The Code also impacts collective bargaining. Section 62 mandates that workers in all industrial establishments must provide a 14-day notice prior to a strike. Crucially, strikes are prohibited during conciliation proceedings. Since conciliation commences immediately upon receipt of a strike notice and the state can prolong it indefinitely, the legal window to stage a lawful strike is effectively closed. Additionally, the requirement to frame “Standing Orders” now applies only to establishments with 300 or more workers (up from 100), effectively removing the rule of law from the factory floor for smaller units.
The Code on Social Security, 2020
Merging nine laws, including the EPF Act, this Code recognises “gig workers” and “platform workers” for the first time (Section 2(35)). However, it stops short of defining them as “employees”. Consequently, aggregators like Uber or Zomato are not liable for standard contributions like PF. Instead, the Code proposes a welfare fund financed by a levy of 1-2% on the aggregator’s annual turnover. This creates a welfare model based on cess rather than rights. Furthermore, Section 142 mandates Aadhaar for registration. Given prevalent documentation errors among the migrant workforce, critics argue this creates a technological barrier or “digital exclusion”.
The Occupational Safety, Health (OSH) and Working Conditions Code, 2020
Replacing 13 laws, this Code redefines the ‘Factory’ (Section 2(w)) by increasing the threshold from 10 to 20 workers (with power) and 20 to 40 workers (without power). This deregulation removes thousands of small manufacturing units, often sites of poor safety standards, from the purview of stringent regulations. Similarly, the Code now applies only to contractors employing 50 or more workers (raised from 20), incentivising principal employers to fragment their workforce to escape compliance.
While the Code retains the 8-hour daily work limit, it introduces the concept of “spread-over” time, left to be defined by Rules. Unions fear this will allow state governments to legally stretch the workday to 12 hours under the guise of longer breaks. Additionally, Section 128 empowers the government to exempt any establishment from the Code through a simple notification, essentially allowing the Executive to suspend safety laws for sectors like Special Economic Zones without parliamentary approval.
Why are trade unions opposing the Codes?
The notification triggered immediate protests by the Joint Platform of Central Trade Unions (CTUs) and the Samyukt Kisan Morcha (SKM).
They base their opposition on three pillars.
- First, they cite procedural illegitimacy, arguing that passing laws without debate and notifying them without convening the ILC violates ILO conventions.
- Second, the CTUs contend that by effectively banning strikes, diluting standing orders, and removing security of tenure, the Codes reduce workers to a state of “virtual slavery”, stripping them of collective bargaining power.
- Finally, unions like the AIPEF contend these Codes are a prerequisite for privatisation, arguing that dismantling labour protections in the public sector is a strategic move to lower liabilities, making state assets more attractive for private buyers.
[Courtesy: The Wire, an Indian nonprofit news and opinion website. It was founded in 2015 by Siddharth Varadarajan, Sidharth Bhatia and M. K. Venu.]
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How India’s New Labour Codes Dismantle Worker Protections
Anand Teltumbde
When the Modi government implemented four new labour codes on November 21, it claimed to be delivering “one of the most comprehensive and progressive labour-oriented reforms since Independence”. The prime minister himself celebrated the moment with his characteristic triumphalism, declaring that the codes “greatly empower our workers” while simplifying compliance for businesses.
The Joint Platform of Central Trade Unions comprising ten major trade unions saw it differently. In a scathing statement, they condemned the implementation as a “deceptive fraud” against India’s working people and burned copies of the codes in street protests.
The Communist Party of India (Marxist) charged that the reforms “dismantle 29 hard-won labour laws” and “shift the balance sharply in favour of employers”. Even the Association of Indian Entrepreneurs, hardly a bastion of worker advocacy, expressed concern about significantly increased operating costs.
Who is right? Is this historic reform or historic betrayal? The answer lies in the details – in comparing specific provisions of the old laws with their equivalents in the new codes. When we examine these comparisons systematically, a clear pattern emerges: beneath the rhetoric of modernisation and expanded coverage, the new codes systematically weaken protections, intensify precarity and shift power dramatically from workers to employers.
The retrenchment revolution
Perhaps the most consequential change concerns retrenchment – the permanent termination of workers’ employment. This provision reveals the codes’ essential logic with stark clarity.
Under the Industrial Disputes Act, 1947, factories, mines, or plantations employing 100 or more workers were required to obtain permission from the central or state government before laying off, retrenching, or closing down operations. These three sectors did not comprise more than one-third of the organised sector.
Under the Industrial Relations Code, 2020, that became effective last month, the threshold has been tripled to 300 workers and it is made applicable to the entire organised sector. It provides for the increase of this threshold by a notification of the government. Companies with up to 300 employees can now retrench staff without any approval.
Thus, employers at establishments with 100-299 workers – the vast swath of Indian industry, in excess of 87% – can now fire workers at will without government oversight, without demonstrating cause, and without facing consequences for arbitrary dismissals.
The real effect is to create a massive class of workers who live in constant fear of arbitrary termination. An employer dissatisfied with a worker’s union activity, caste background or personal demeanour can simply fire them – no questions asked, no appeals allowed. This is not flexibility. It is tyranny.
Strangling the strike
The right to strike is fundamental to workers’ collective power. It is the ultimate leverage workers possess against exploitative employers – the ability to withdraw their labour and halt production. The new codes systematically strangulate this right.
Under the Industrial Disputes Act, 1947, workers in “public utility services” – railways, ports, sanitation, and similar essential services – were prohibited from striking without notice. Other workers faced fewer restrictions.
Under the new Industrial Relations Code, 2020, workers in any establishment cannot go on strike unless they give notice within 60 days before striking and within 14 days of giving such notice.
Strikes are prohibited during the pendency of conciliation proceedings (and seven days after), during tribunal or arbitration proceedings (and 60 days after) and during any period when a settlement or award is in operation.
If over 50% of a company’s workers take concerted casual leave, it will be treated as a strike – meaning that even coordinated absence becomes illegal without prior notice.
These procedural requirements make spontaneous strikes – often the most effective kind – virtually impossible. Workers must intimate their intentions weeks in advance, giving employers ample time to prepare strikebreakers, intimidate organisers or preemptively fire troublemakers.
More devastatingly, conciliation proceedings might go on for years and workers will not be able to agitate no matter how long the delay in justice. Since employers can easily drag out conciliation or tribunal proceedings, they can effectively keep workers from striking indefinitely.
As the All India Central Council of Trade Unions points out, these provisions violate International Labour Organisation principles, which state that obligations to give prior notice are acceptable only “where this does not cause the strike to become very difficult or even impossible in practice”. The Indian codes cross precisely this line – making strikes so difficult and so risky that they become practically impossible for most workers.
[The Supreme Court has emphasized the importance of unions in B.R. Singh v. Union of India (1989), calling collective bargaining “the backbone of industrial democracy.” The IR Code, however, reconfigures this landscape.
If workers strike anyway, they face steep penalties. The fine for an illegal strike has jumped from fifty rupees to ten thousand rupees which is roughly half a month’s wages for an average worker. This is not a penalty; it’s financial ruin designed to terrify workers into silence.
– Editorial addition]
Permanent precarity
The introduction of broad fixed-term employment provisions perhaps represents the codes’ most insidious innovation – creating a legal framework for permanent job insecurity.
Under previous laws. fixed-term employment existed in limited forms, but most regular work was governed by permanent employment norms with significant job security protections.
Under the Industrial Relations Code, 2020, fixed-term employment is introduced across all sectors, and such workers can be fired without notice, will not be eligible for retrenchment compensation and shall be barred from participating in strikes called by other workers.
The codes claim that fixed-term employees receive “benefits on par with permanent workers”, but this is deceptive. Given that the threshold for standing orders has been elevated to 300 workers, employers can hire as many fixed-term employees as they wish instead of permanent workers, for work of regular nature as well.
Employers can now staff their entire operation with fixed-term workers whose contracts expire regularly. These workers theoretically get equal pay and some benefits, but they live under the constant threat that their contract will not be renewed.
The constant fear of non-renewal of their fixed-term contracts and not being granted permanent status will discourage them from exercising their freedom of association.
A fixed-term worker who joins a union, demands better conditions, or refuses exploitative overtime knows that when their six-month or one-year contract expires, the employer can simply not renew it – no explanation required, no appeal possible. This creates a workforce that is legally employed but permanently insecure.
Threshold raised
Standing orders are the written rules governing employment conditions – working hours, leave policies, disciplinary procedures, grounds for dismissal. They provide transparency and limit arbitrary employer action.
Under the Industrial Employment (Standing Orders) Act, 1946, industrial establishments employing 100 or more workers were required to prepare formal standing orders and have them certified. Under the Industrial Relations Code, 2020, the threshold has been raised to 300 workers.
What this means in practice is that establishments employing 100-299 workers – again, a vast category – need not maintain formal written rules governing employment. Employers can change conditions arbitrarily, implement disciplinary procedures capriciously and alter leave policies without notice or consultation.
This might seem like mere paperwork reduction, but standing orders serve a crucial function: they prevent arbitrary management action by establishing clear rules that apply to everyone. Without them, workers have no recourse when employers suddenly change shift timings, reduce break periods, or impose new attendance requirements. Management’s word becomes law, with no written standard to appeal to.
[This facilitates a Just-in-Time workforce model. Much like Toyota’s inventory system where parts arrive only when needed, workers can now be onboarded when demand is high and shed immediately when it drops, with no government oversight. By law, permanence has been replaced with disposability.
– Editorial addition.]
Trade union recognition
The codes introduce a new system for recognising trade unions that appears neutral but functions to fragment and weaken union power.
Under the Trade Unions Act, 1926, multiple unions could exist in an establishment, and settlements made with any registered union were binding on its members. There was no concept of a single “negotiating union”.
Under the Industrial Relations Code, 2020, a trade union with at least 51% (lowered from the 75% in the 2019 bill) of workers as members will be the sole negotiating union. In practice, the 51% threshold is nearly impossible to achieve in most establishments, particularly large ones. This weakens collective bargaining by requiring super-majoritarian union membership before workers can negotiate as a unified force.
More insidiously, it incentivises employers to create or support several small unions to prevent any single union from reaching the threshold – a classic divide-and-rule strategy.
Where several small unions exist, the negotiating council mechanism sounds democratic but actually weakens worker power. Employers can play unions against each other, reaching agreements with more compliant unions while ignoring militant ones. The fragmentation of worker representation serves employer interests perfectly.
Definition of wages
The codes introduce a uniform definition of “wages” that sounds technical but has significant implications for workers’ monthly income.
Under previous laws, the definition of wages varied across different acts, and many employers structured compensation to minimise the “basic pay” component by loading up allowances – housing allowance, transport allowance, special allowance and the like.
Under the Code on Wages, 2019, the new definition standardises the pay structure, requiring basic pay to form at least 50% of total remuneration, with allowances capped at 50%.
What this means in practice: while take-home pay may fall slightly, retirement benefits will grow because Provident Fund and gratuity contributions are calculated on basic pay. This sounds like a reasonable trade-off – slightly less money now for greater retirement security.
But here is the problem: workers, especially young workers, need money now to survive – to pay rent, buy food, support families. Reducing take-home pay while increasing retirement contributions five decades hence is cold comfort to someone struggling to make ends meet today.
Moreover, it assumes workers will remain employed long enough to collect those retirement benefits – an increasingly dubious prospect, given the other provisions that make employment more precarious.
The provision also significantly increases employer costs, which employers will resist by hiring fewer workers or pushing more employment into the unorganised sector where these rules don’t effectively apply.
The overtime illusion
The provisions of the codes on working hours reveal how ostensible protections can mask intensified exploitation.
Under the Factories Act, 1948, workers could not be required to work more than nine hours per day or 48 hours per week without overtime compensation.
Under the Occupational Safety, Health and Working Conditions Code, 2020, the codes introduce a standardised 48-hour weekly work limit, with clearer rules on overtime. However, critics point out provisions that effectively allow 12-hour workdays.
While the codes formally maintain the 48-hour weekly limit, they permit employers to stretch daily working hours significantly beyond traditional limits through flexible rostering and overtime provisions. A 12-hour workday, even if compensated with overtime, is physically and mentally exhausting in ways that undermine workers’ health, family life, and human dignity.
The codes present this as flexibility benefiting both employers and workers – employers can adjust to production demands, workers can earn overtime pay. But in practice, employers will pressure workers to accept extended hours, particularly fixed-term and contract workers desperate to have their contracts renewed. The “choice” to work 12-hour days becomes no choice at all.
Permanent insecurity
The treatment of contract labour reveals the codes’ fundamental orientation toward employer interests.
Under the Contract Labour (Regulation and Abolition) Act, 1970, contract labour was supposed to be regulated, with provisions for abolition in certain circumstances and requirements that contractors be licensed.
Under the Occupational Safety, Health and Working Conditions Code, 2020, the code provides for automatic absorption of contract workers into the establishment of the principal employer where they are engaged through an unlicensed contractor. Contract workers are supposed to receive equal benefits as permanent staff.
The automatic absorption provision sounds protective, but it only applies to unlicensed contractors – giving employers every incentive to ensure contractors are properly licensed. The promise of equal benefits rings hollow when contract workers can be terminated at any time by simply ending the contract with the contractor who employs them.
The result is a multi-tiered workforce within single establishments: a small core of permanent workers with job security, a larger group of fixed-term workers with temporary security, and a massive base of contract workers with no security at all. All three groups do similar work, but face radically different conditions. This fragmentation prevents worker solidarity and ensures a race to the bottom in working conditions.
Recognition without protection
The treatment under the coes of gig and platform workers exemplifies the gap between rhetorical inclusion and substantive protection.
Under previous laws, gig and platform workers – delivery riders, cab drivers and the like – were classified as independent contractors with essentially no labour law protections. Under the Code on Social Security, 2020, Gig and platform workers receive legal recognition, with aggregators required to contribute 1%-2% of annual turnover to a social security fund.
Recognition is better than invisibility, but it is inadequate. Gig workers remain classified as contractors rather than employees, meaning they lack job security, minimum wage guarantees, working hour protections and collective bargaining rights. The social security fund is a token gesture – 1%-2% of turnover is minimal given platforms’ business models.
Critics note that workers in the gig economy are typically classified as independent contractors and thus are not provided the protection of various labour laws. The codes formally acknowledge gig workers exist but refuse to grant them full employee status with commensurate protections. This legitimises the platform economy’s exploitation model while creating the appearance of progressive reform.
Enforcement exemptions
Many code provisions apply only to establishments above certain size thresholds, effectively excluding the vast unorganised sector where most Indian workers labour.
The Occupational Safety, Health and Working Conditions Code exempts units with fewer than 20 or 40 workers, depending on power use, from several requirements, including factory registration.
Linking social benefits to establishment size leaves out millions of informal workers who work in small units or perform home-based work.
India’s labour force is overwhelmingly employed in small establishments and the unorganised sector. By exempting small establishments from many requirements, the codes effectively exclude most workers from their protections. The organised sector provisions, however weakened, apply to perhaps 10% of workers. The remaining 90% face even fewer protections than before.
This creates perverse incentives for employers to remain small or fragment operations into multiple small units to avoid regulation. It also means that the codes’ ballyhooed expansions of coverage are largely illusory – the workers who most need protection are systematically excluded.
A deceptive fraud
The trade unions are right to call the labour codes a deceptive fraud. The deception lies in the gap between rhetoric and reality – between claims of worker empowerment and the systematic weakening of every provision that protected workers. The fraud lies in presenting employer enrichment as worker welfare, precarity as flexibility, and disempowerment as modernization.
When the Communist Party of India (Marxist) argues that the codes “dismantle 29 hard-won labour laws” and “shift the balance sharply in favour of employers”, while the government claims they “empower workers”, these are not merely different political perspectives. They are incompatible descriptions of reality. The evidence – provision by provision, comparison by comparison – validates the unions’ assessment.
India’s workers deserved genuine reform: enforcement of existing protections, expansion of coverage to the unorganized sector, democratisation of workplace governance, and meaningful penalties for employer violations. Instead, they received codes that legalise their exploitation, formalise their precarity and celebrate their subordination as liberation.
This is not reform. This is betrayal. And workers burning copies of the codes in the streets understand this better than all the government’s triumphalist rhetoric can obscure.
[Writer and civil rights activist Anand Teltumbde is a former CEO, Petronet India Limited and a professor at IIT Kharagpur and the Goa Institute of Management. He is the author most recently of The Cell and the Soul: A Prison Memoir. Courtesy: Scroll.in, an Indian digital news publication, whose English edition is edited by Naresh Fernandes.]
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In another article published on Countercurrents.org, Liquidation by Legislation: Why the New Labour Codes Are the Next Farm Bills, Syed M Nasif adds (extract):
When Inspection Becomes Advice
Under the old Factories Act of 1948, the Labour Inspector was a figure of authority. While the system wasn’t perfect, Section 92 gave inspectors the teeth to prosecute violations, serving as a genuine deterrent against unsafe conditions.
The new Occupational Safety, Health and Working Conditions Code, 2020, has fundamentally changed this role. The Labour Inspector is now redesignated as an “Inspector-cum-Facilitator.” This isn’t a normal name change; it’s a philosophy shift. Under Section 51, their primary job is now to “supply information and advice” to employers.
This retreat is even at odds with ILO Convention No. 81 (Labour Inspection Convention, 1947), which requires that inspectors be empowered to conduct “unannounced and free” inspections to which India ratified in 1949.
Crucially, the law now mandates that for many first-time offenses, the Facilitator must give the employer a written opportunity to fix the violation before any prosecution can begin. This process effectively turns law enforcement into a warning system. It signals that compliance is negotiable and that the state has stepped back from its adversarial role in protecting workers. When one combines this with the compounding of offenses in the Code on Wages, where crimes become fines (replaced for imprisonment) you can now settle with a cheque and deterrence collapses.
[Syed M Nasif is a law and journalism student and a Para-Legal Volunteer under DLSA, Kerala. His writing focuses on labour rights, constitutional law, and the intersection of state policy and corporate power.]
Shirin Akhter, in an article published in Newsclick, “Labour Codes: Structural Rewriting of Workers’ Rights, adds (extract):
Working Hours and Employment Security
Under the Occupational Safety, Health and Working Conditions Code, Sections 25-29 permit workdays extending up to 12 hours within a 48-hour week. In practice, this represents a departure from the roughly 40-hour norm that has taken root across much of India’s organised sector. Internationally, the movement, whether in Europe, East Asia or through ILO (International Labour Organisation) conventions, has been toward shorter, not longer, workdays. A 12-hour shift, supported by ILO research and global workplace injury data, is associated with fatigue, reduced productivity and adverse health outcomes.
Women are particularly vulnerable, given the disproportionate unpaid care responsibilities they shoulder. The PLFS 2022–23 (Periodic Labour Force Survey) reveals that Indian women spend nearly six times more time on unpaid work than men. Extended workdays also erode the time available for education, skill development and civic participation. This raises a constitutional question: when Article 42 directs the State to secure humane conditions of work, and Article 21 has been interpreted (in cases such as Bandhua Mukti Morcha and Olga Tellis) to protect dignity and livelihood, can laws that lengthen the workday be justified without adequate safeguards?
Social Security and Substantive Equality
The Social Security Code includes gig and platform workers for the first time, an important step in principle given India’s rapidly expanding platform economy. Yet many provisions depend on future schemes that remain unnotified, and employer or aggregator contributions are unspecified. This creates uncertainty for workers like delivery riders, drivers, care workers, who need protection the most. A social security system without enforceable financing mechanisms becomes aspirational rather than assured.
Equally notable is the silence of the Codes on structural disadvantages. India’s labour market is characterised by sharp caste-based wage gaps, persistent gender segregation, religious discrimination in hiring and extremely low female workforce participation. While the Codes reiterate non-discrimination, they do not introduce mechanisms for proactive enforcement, gender-sensitive workplaces, caste-aware monitoring or explicit protections for transgender workers. Neutral language does not dismantle entrenched inequality; it simply reproduces it.
A Democratic and Constitutional Imperative
Taken together, the new Labour Codes shift the centre of gravity of Indian labour regulation in a direction that unmistakably benefits large corporate capital while leaving both workers and India’s vast micro, small and medium enterprises (MSME) exposed.
Although the Codes are frequently celebrated as pro-industry reforms, the reality is considerably more uneven. India’s industrial landscape is structurally built on MSMEs: according to the MSME Annual Report 2023–24, over 99% of all enterprises belong to this category, and they employ more than 110 million people, which is far more than the formal corporate sector employment. These units operate on thin margins, depend on predictable regulation and face chronic constraints relating to credit access, fluctuating demand and rising costs. For them, deregulation without infrastructure, safety nets or state support creates vulnerability, not flexibility.
The Codes further widen this imbalance by raising retrenchment thresholds, weakening inspections and shifting compliance toward self-certification, measures that overwhelmingly favour large firms with in-house legal teams, compliance staff and large financial reserves.
Smaller enterprises rely on clear regulatory guidance and State oversight to ensure fair competition, especially when competing with corporations that can absorb compliance shocks with ease.
The latest available structural data reinforces this asymmetry: the Sixth Economic Census (2013-14), still the most comprehensive dataset on enterprise size, shows that establishments with large workforces form only a tiny fraction of India’s non-agricultural units. More recent surveys such as the Annual Survey of Industries confirm that even within organised manufacturing, factories with 50 or fewer workers constitute nearly two-thirds of all units but account for just over one-tenth of employment and an even smaller share of value added, with capital, output and bargaining power concentrated overwhelmingly at the top.
In this context, reforms that ease restructuring for large firms but offer no protective mechanisms for smaller ones deepen an already tilted industrial landscape.
For workers within MSMEs, who form the overwhelming majority of India’s labour force the consequences are even starker. Most such units lack formal HR (human resource) systems, internal safety structures or grievance mechanisms. For them, inspections are not harassment; these are the only external safeguards ensuring minimum standards of wages, safety and dignity. Weakening State oversight, therefore, harms workers directly while leaving smaller employers exposed to legal uncertainty, compliance risks and unfair competitive pressures from larger firms.
This dual vulnerability, workers without enforceable protections and smaller employers without institutional support, reveals the central contradiction of the Labour Codes. Rather than creating a balanced framework of rights and responsibilities, these consolidate bargaining power upward, privileging a narrow segment of large industrial capital while millions of smaller producers and workers are left to cope with precarity on their own. When labour laws amplify the advantages of those already possessing disproportionate economic power, the question at stake is not administrative efficiency but economic justice.
Because their implications extend far beyond procedural reform, the Codes demand democratic re-examination rooted in constitutional values. India’s labour laws must evolve, but evolution cannot mean shifting power away from workers and smaller producers towards those already positioned at the top of the economic hierarchy. It cannot mean weakening the fragile rights of workers who sustain India’s economy. Nor can it mean constructing a framework in which MSMEs face greater uncertainty while large corporate capital operates with unprecedented freedom.
In order to evolve into a society that is committed to social and economic democracy, labour law must operate as an instrument of justice, fortifying protections, supporting smaller enterprises and ensuring that economic growth aligns with the constitutional promise of dignity, fairness and equality. Where the Labour Codes depart from these principles, reconsideration is not only desirable but essential. The stakes, both human and institutional, are too significant for anything less than transparency, public debate and constitutional vigilance.
[The writer is Associate Professor at Zakir Husain Delhi College, University of Delhi. Courtesy: NewsClick, an Indian news website founded by Prabir Purkayastha in 2009, who also serves as the Editor-in-Chief.]
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New Labour Codes Erase a Century of Hard-Won Workers’ Rights in One Stroke
Dithhi Bhattacharya
On November 21, 2025, the Indian government implemented four labour codes through executive fiat. This would come as a surprise to only those who forgot that the Codes were passed in the parliament without debate while most of the opposition members were suspended for protesting the three farm bills passed the previous day.
The Bharatiya Janata Party (BJP) government has once again used its majority to change the face of labour legislation and jurisprudence in the country. In one sweeping stroke, the government has wiped away the struggles of millions of workers in the subcontinent over the last century and a half.
From the time the Codes were legislated in September 2020 to now, the government has steadfastly refused to consult with trade unions, disregarding the tripartite process in its entirety, and even the state governments, defying the constitutional spirit that placed labour in the Concurrent List. The BJP government has even ignored the opposition from Bharatiya Mazdoor Sangh (BMS), their own fraternal organisation in the larger Sangh family.
Constitutional rights under attack
There are three broad reasons why trade unions, irrespective of their differences, are opposing the codes – one, its attempt to redefine the Constitution and constitutional rights of working people; two, its attempt to further skew the balance of power between labour and capital by tilting the laws that protected basic labour rights in favour of capital; and three, its violation of the international labour standards as defined by the International Labour Organisation (ILO) conventions.
Labour is a subject in the Concurrent List. Yet, the Codes grant the Union government sweeping powers to frame rules, override existing state laws and dictate regulatory structures.
States have been reduced to mere implementing agencies with no meaningful legislative authority. This is a direct assault on the federal balance envisioned by the Constitution under Articles 246, 254 and the Seventh Schedule.
The Codes hand over essential legislative powers to the executive – particularly the Union government – through blanket rule-making authority. The power to decide the national floor wage, access to social security, inspection mechanisms, and thresholds for layoffs have been removed from Parliament and handed to bureaucrats. This violates the separation of powers and the principle that essential legislative functions cannot be delegated.
By creating arbitrary thresholds regarding the number of workers for applicability of the Codes, the new legislation has excluded the majority of India’s workforce.
Additionally, the move towards fixed-term employment, relaxation of safety norms, and diluted inspection systems creates unjustifiable discrimination between workers performing the same work in the same establishments, thereby legalising inequality in violation of Article 14 of the Constitution.
The Codes, for the first time, introduce the concept of a national floor level wage (NFLW) within the legal structure and state that no wage can be set below the NFLW. Under the Minimum Wage Act, no wage could be lower than the minimum wage and if it was so set, it was deemed to be forced labour and would be a criminal offense punishable by imprisonment.
By creating a NFLW, the codes remove the criminal liability of non-payment of minimum wages, thereby allowing forced labour in violation of Article 23 of the Constitution. More crucially, the NFLW, which can be set arbitrarily by the executive, will make minimum wages extremely sticky and collective bargaining to raise it would be a herculean task.
The Industrial Relations Code imposes unreasonable restrictions on union registration, majority status and the right to strike. By limiting who can represent workers and by creating near-impossible conditions for lawful strikes, the government violates the constitutional guarantee of freedom of association under Article 19(1).
And finally, by weakening safety provisions, increasing working hours in a day by stealth, allowing easy hire-and-fire, and dismantling social security mechanisms, the Codes strike at the heart of workers’ right to live with dignity guaranteed under Article 21 of the Constitution.
Taken together, these changes amount to a systematic assault on our fundamental rights, undermining equality, freedom, and dignity as guaranteed by the Constitution.
Moving from de facto to de jure
Successive governments since 1991, irrespective of their political colour, have been under pressure from domestic and global capital to push for deregulation of labour. Efforts towards making these changes had been piecemeal at best until the National Democratic Alliance (NDA) government, led by A.B. Vajpayee constituted the Second National Commission on Labour (SNCL) in 1999.
The SNCL was the first body to recommend the codification of all existing labour laws into six Codes. The SNCL was also mired by the fact that they did not include all the centrally recognised trade unions.
In 2001, the government amended the Trade Unions Act, 1926, which set a minimum membership threshold for registration of a trade union. This membership would be verified by employers before granting registration to the trade union.
This amendment made it difficult for unions to enrol members, especially precarious workers, who feared losing their jobs at the time of verification. A classic example of this was the repeated attempts made by Maruti Suzuki workers at the company’s Manesar plant to register their union in Haryana.
The workers failed to register their union on two occasions and when they finally managed to do so, the employer came down heavily on them, leading to the 2012 incident in which 13 workers were sentenced to life for allegedly ‘killing’ a manager.
Though the SNCL recommendations got shelved when the United Progressive Alliance came to power in 2004, the battle to dilute labour rights continued in courtrooms and states.
The reinterpretation of the Contract Labour (Regulation & Abolition) Act, 1970 (CLRA Act) by the Supreme Court in the SAIL (2001) and Uma Devi (2006) cases made it difficult to seek regularisation of contract workers under the law.
Once the courts began ruling in ways that strengthened employers’ hands, companies across the country – global as well as domestic – started employing workers through a range of temporary and non-permanent contracts. These shifts have made it easier to close and move factories and allowed employers to hire and fire workers with greater ease.
But once in a while, employers faced resistance from unions that fought on the ground and in courtrooms. Many of these battles stretched out for years and a few were won. In 2017, the Supreme Court of India upheld an industrial tribunal and high court ruling that regularised over 2,700 contract sanitation workers of Mumbai Municipal Corporation after a 25-year battle fought by their union, the Kachra Vahatuk Shramik Sangh. These victories created case law, which then created legal precedence.
In 2014, the BJP was voted back to power on the promise of ‘acche din’ for the people. But they also promised, in their election manifesto, to: “Take all steps; like removing red-tapism involved in approvals, to make it easy to do business… and undertake labour reforms, besides other steps to create a conducive environment for investors”. While the people still wait for the ‘achhe din’ to come, the framing of the Labour Codes was one of the key steps taken by the government to legalise ‘achhe din’ for employers.
While the BJP government at the centre mulled over implementation of the Codes, the BJP governments in the states began to roll out the key provisions of the Codes to test waters.
In 2014, the Vasundhara Raje government in Rajasthan increased the threshold limit for applicability of the Factories Act, the Contract Labour Act and the Industrial Disputes Act. They also put limitations on collective action and union recognition. Lauded as the Rajasthan model, other BJP ruled states – such as Uttar Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Haryana and Karnataka – began to adopt it. This paved the path for the inter-state race to the bottom on labour standards to attract investment, putting non-BJP ruled states under political pressure. Thus started the process of changing the law to suit the existing conditions established by employers due to the imbalance of power between labour and capital. What used to be violations of law followed by impunity by employers has now become law.
A law divorced of morality
In the guise of ‘simplification, rationalisation and making (labour laws) less cumbersome’, the Codes have diluted the basic labour rights guaranteed by the 29 laws they subsumed.
The Codes have simultaneously put in place a framework of legal protection for employers as well as simplifying entry and exit from businesses. The labour codes consistently protect the right of employers to profit against the right of workers to a dignified life.
Let us take the example of the registration process for a factory under the OSH code and that of a trade union under the IR Code.
Even if we say, for argument’s sake, that the process by law of natural justice should be the same, we can see how the Code ensures ‘ease of business’ while creating impediments in the registration of unions that will represent workers’ interests.
Under the OSH Code, factories can make electronic applications for registration of the establishment.
The registering officer, on receipt of this application, shall register the establishment and issue a certificate of registration. The Code has no mandatory provision for the officer to conduct verification of the premises and its facilities to meet the safety requirement as prescribed under law before issuing the certificate. This has been done in the name of removing ‘inspector-raj’.
Further, if the officer fails to issue the certificate within a specified period as in the rules, the establishment will be deemed to be registered and an auto-generated certificate will be issued.
However, this puts hundreds of workers’ lives at risk as the government withdraws from its responsibility of regulating capital and allows self-certification by employers.
This gets compounded when we add the amendment to the provision of the factory inspectorate. The inspectors, under the code, have been diluted to ‘inspectors-cum-facilitators’. As the name suggests, the inspectors are now supposed to facilitate the process in which employers can comply with the law. The power of the inspectors to take punitive action against employers violating the law has been removed.
Inspectors can no longer conduct random and surprise inspections in factories. They are supposed to inform the employers before visiting a factory that is randomly selected by an algorithm. This will make it impossible for inspectors to conduct inspections based on information from workers or other whistleblowers. By providing a notice before inspection, the inspectors will now allow employers sufficient time to fix their violations or coach and intimidate their workers before the inspection is conducted. This not just dilutes the power of the inspectors, it also dilutes the power of workers and their organisations. This dilution of the powers of the inspector is also in violation of the ILO Convention on Labour Inspection (C081) ratified by India in 1949.
On the contrary, in the case of trade union registration, the Code maintains that the membership of the trade unions will be verified by the Registrar of Trade Unions. This means that the Registrar will verify with the employer about the employment status of the workers who have joined the union. This opens the workers to intimidation and harassment at the workplace.
For the purpose of verification, the Registrar may ask for documentation other than those required under the law regarding office bearers and members. There is no provision of a time limit within which the Registrar has to conclude this verification process and neither is there a provision of automatic registration in case of delays.
Thus, workers may wait for months or even years for the registration of their union that would protect their lives and dignity, while a factory can be registered without any verification, which poses mortal risk to the lives of workers.
To take another instance, the IR Code dilutes the provisions of Chapter VB of the Industrial Disputes Act, 1948. The Act provided special protection for workers in establishments with more than 100 workers, regulating lay-off, retrenchment and closure, requiring prior government permission and notice and compensation for such actions, preventing sudden job losses in big factories, mines and plantations.
The IR code increases this threshold limit to establishments with more than 300 workers at a time when factories are getting increasingly automated and the number of workers required on the shopfloor are falling.
Despite all claims by the government that the Codes will apply to more workers than those under the earlier laws, the Codes will apply to a smaller number of workers given these changes.
On the other hand, the same IR Code makes it impossible for workers to engage in collective action, including strikes. The right to strike is the last resort of workers to exercise their power to push employers to negotiate.
Under the Industrial Disputes Act, 1948 (ID Act), workers of a public utility had to provide notice to employers before they engaged in strike action. The underlying reason for this was the fact that withdrawal of services in a public utility could result in disruption of public life for which the government, which was earlier the sole provider of public utility services, had to make alternate provisions.
The IR Code extends this mandatory requirement to provide notice of strike action to employers in all establishments, irrespective of their production motive. The Code even increases this notice period from 42 days (six weeks) in the ID Act to 60 days in the Code. This mandatory notice period provides employers with sufficient time to intimidate workers, and prepare means to replace the workforce with other temporary workers during the strike action, rendering the strike ineffective.
Equating not-for-profit public services to profit-making establishments is not merely an act of simplification, it is clearly an attempt to protect employers’ right to profit at the cost of their workers.
If the workers still decide to go on strike, the Code puts the following restrictions on this action: No worker can go on strike
- within 14 days of providing this notice;
- before expiry of the date of strike as specified in the notice;
- during conciliation proceedings and 7 days after conclusion of the proceeding;
- during proceedings at a tribunal and 60 days after conclusion of the proceeding;
- during arbitration and 60 days after conclusion of the proceeding;
- during any period when a settlement is in operation.
These restrictions provide no time to workers in which they can ‘legally’ engage in strike action. Under these conditions, if we consider the case of an establishment employing less than 300 workers, the employer can declare a closure and conclude it within a month, while the workers at that establishment will have to keep waiting for two months to strike ‘legally’ against this closure.
Despite this, the government would like us all to believe that the labour codes are merely an attempt to simplify and rationalise the voluminous labour laws existing in our country. It would be foolish to fall for this dangerous claim.
The Labour Codes represent a structural rupture. They attempt to rewrite the relationship between labour, capital and the state in favour of employers, while hollowing out constitutional guarantees of equality, dignity, federalism and freedom.
These Codes legalise insecurity, normalise precarity and institutionalise inequality. They transform what were once violations of law into the law itself.
The struggle now is not only to restore old rights but to defend the very idea that workers are citizens with constitutional protections, not merely inputs in a cost-minimising production system.
The fight against the Codes is, therefore, not just a labour struggle. It is a struggle to defend the Constitution, democracy and the dignity of those who produce the wealth of this country.
[Dithhi Bhattacharya is the vice president of Karnataka independent garment workers union, an affiliate of the new trade union initiative. Courtesy: The Wire, an Indian nonprofit news and opinion website. It was founded in 2015 by Siddharth Varadarajan, Sidharth Bhatia and M. K. Venu.]
